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Q2 2014 revenues at EUR 87.2 million
Q2 2014 IFRS pro forma operating income of EUR 0.4 million (0.5% of revenues)
Q3 2014 revenues expected to range between EUR 82 million and EUR 87 million
with IFRS pro forma operating income between 0% and 4% of revenues
Martinsried/Munich, Germany. July 24, 2014. ADVA Optical Networking (FSE: ADV)
announced Q2 2014 financial results for the quarter ended on June 30, 2014, and
prepared in accordance with International Financial Reporting Standards (IFRS).

Q2 2014 IFRS FINANCIAL RESULTS
Including the operations of recently acquired Oscilloquartz SA since April
4, 2014, in Q2 2014 revenues rose to a record high of EUR 87.2 million, up
11.2% vs. Q2 2013 at EUR 78.4 million and up 11.6% vs. EUR 78.1 million achieved
in Q1 2014. This result is in the upper half of guidance of between EUR 84
million and EUR 89 million. IFRS pro forma operating income, excluding stock-
based compensation and amortization & impairment of goodwill & acquisition-
related intangible assets, amounted to EUR 0.4 million or 0.5% of revenues in
Q2 2014, also in the upper half of guidance of between -2% and +2% of
revenues. This compares to EUR 1.5 million or 2.0% of revenues in Q2 2013 and
EUR 0.4 million or 0.5% of revenues in Q1 2014. The year-on-year pro forma
operating income reduction is largely due to initially lower margin
Oscilloquartz operations, expansion of our customer base into new verticals, and
one-time certification costs for next-gen technology at one of our largest
customers.

The IFRS operating income amounted to rounded nil in Q2 2014 after EUR 1.2
million in Q2 2013, and after EUR 0.1 million in Q1 2014. The key driver for the
unfavorable year-on-year development is the above-mentioned decrease of pro
forma operating income.

The IFRS net income amounted to rounded nil in Q2 2014, down from EUR 0.1
million in Q2 2013. This reduction was largely driven by the development of the
operating result described above. These effects were partly compensated by net
foreign currency exchange gains of EUR 0.3 million, after losses of EUR 0.2
million in Q2 2013 and by lower tax expenses of EUR 0.1 million in Q2 2014 after
EUR 0.6 million in Q2 2013. Basic and diluted IFRS net earnings per share in Q2
2014 were nil each after nil respectively in Q2 2013.

"We are pleased with the development of our Q2 2014 revenues, reaching an all-
time high of EUR 87.2 million, and at the upper half of guidance. The quarter-
on-quarter increase of 11.6% is driven largely by investments in enterprise
solutions, reflecting the continued network traffic growth due to the increasing
adoption of cloud based services, coupled with rising demand for innovative
enterprise network technology in a broad range of verticals. Year-on-year, the
increase of 11.2% is primarily due to higher demand for carrier infrastructure
solutions offering scalability and ease-of-use. Our pro forma gross margin
decreased from 35.4% in Q1 2014 to 32.8% in Q2 2014. This reduction is largely
related to the expansion into new verticals and one-time certification costs for
next-gen technology. Prior to amortization of capitalized development projects,
pro forma gross margin decreased from 42.7% in Q1 2014 to 38.9% in Q2 2014. Our
pro forma operating margin came in at 0.5%, in the upper half of guidance, and
also reflects the integration costs of our Oscilloquartz acquisition. We expect
a sustainable improvement of our IFRS pro forma operating income and gross
margins in Q3 2014. In addition, cash and cash equivalents were at an impressive
high of EUR 79.1 million at the end of Q2 2014, up from EUR 77.1 million at the
end of the previous quarter. Net liquidity increased to EUR 40.5 million, up EUR
2.0 million or 5% vs. the end of the previous quarter, demonstrating our
commitment to managing our working capital and strengthening our balance sheet,"
commented Jaswir Singh, chief financial officer & chief operating officer of
ADVA Optical Networking
CONFERENCE CALL
In conjunction with the release of its Q2 2014 financial results on July
24, 2014, ADVA Optical Networking will host a conference call for analysts and
investors at 3:00 p.m. CEST / 9:00 a.m. EDT. Participating in the call will be
ADVA Optical Networking's chief executive officer, Brian Protiva, and chief
financial officer & chief operating officer, Jaswir Singh. Interested parties
may dial in at +49 69 201744 210 or +1 877 423 0830, pin code 792 887#, and
download the corresponding presentation from ADVA Optical Networking's website,
located on the "financial results" page under "conference calls" in the investor
relations section of ADVA Optical Networking's website at www.advaoptical.com.

Q3 2014 OUTLOOK
In Q3 2014, ADVA Optical Networking expects revenues to range between EUR 82
million and EUR 87 million, and anticipates pro forma operating income of
between 0% and 4% of revenues. As a matter of caution, ADVA Optical Networking
notes that it will continue to perform quarterly reviews of the expected
business development with respect to all intangible assets, including
capitalized development expenses. In case of highly adverse business prospects,
these reviews may result in non-cash impairment charges in Q3 2014 and beyond.

"Our record high revenue in Q2 2014 coupled with a strong pipeline and improved
Q3 2014 pro forma operating income guidance indicates continued growth with a
strong focus on strengthening our profitability. In the short-term, we did
sacrifice margin growth by securing new business and acquiring Swiss-based
Oscilloquartz. Both were strategic decisions to expand our solid foundation for
future growth. ADVA Optical Networking is very well positioned to capitalize on
the two dominant mega trends in the IT industry: cloud and mobility. The rapid
rise and adoption of cloud-based IT-solutions drives enormous data center
growth, fueling the demand for fiber-optic connectivity solutions. Our Big-Data-
Transport offering provides high-performance connectivity with unparalleled
security features - a value proposition that resonates well in the industry. And
the growth of mobile services and devices continues to drive carrier
infrastructure investment. More mobile broadband means not only more and better
radio interfaces, it also means more fiber, more optical transmission solutions
and more accurate timing; all things that we do exceptionally well. ADVA Optical
Networking continues to reignite growth with game changing innovation and
differentiating solutions serving as catalysts for investments in cloud and
mobile infrastructure. While we remain committed to optimizing our costs, we are
adding flexibility to our operations capacity and investing appropriately in
revenue-generating activities. These are the key ingredients for renewed
profitability. These efforts will increase our pro forma operating margin in the
second half of 2014. Differentiating ourselves with innovation will create
further value for shareholders," stated Brian Protiva, chief executive officer
of ADVA Optical Networking.

The economic projections and forward-looking statements contained in this
document relate to future facts. Such projections and forward-looking statements
are subject to risks which cannot be foreseen and which are beyond the control
of ADVA Optical Networking. ADVA Optical Networking is therefore not in a
position to make any representation as to the accuracy of economic projections
and forward-looking statements or their impact on the financial situation of
ADVA Optical Networking or the market in the shares of ADVA Optical Networking.

ADVA Optical Networking provides consolidated pro forma financial results in
this press release solely as supplemental financial information to help
investors and the financial community make meaningful comparisons of ADVA
Optical Networking's operating results from one financial period to another.

ADVA Optical Networking believes that these pro forma consolidated financial
results are helpful because they exclude non-cash charges related to the stock
option programs and amortization and impairment of goodwill and acquisition-
related intangible assets, which are not reflective of the Company's operating
results for the period presented. This pro forma information is not prepared in
accordance with IFRS and should not be considered a substitute for historical
information presented in accordance with IFRS.

Published By:
ADVA Optical Networking SE, Martinsried/Munich and Meiningen, Germany
www.advaoptical.com
For Press:
Gareth Spence
t +44 1904 699 358
public-relations(at)advaoptical.com
For Investors:
Karin Tovar
t +1 201 940 7212
investor-relations(at)advaoptical.com
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